BILL SUMMARY:

The Community Impact Investment Tax Credit Act of 2017 establishes a tax credit program for taxpayers making
an impact investment through community development financial institutions to spur the creation and
preservation of more affordable housing. Taxpayers would be eligible to claim as a credit against their District
income taxes, unincorporated business franchise taxes or corporation franchise taxes, 33 percent of all eligible
investments.

ISSUE:
The affordable housing crisis is multifaceted and is not endemic to the District of Columbia but is being felt across
the country. According to a report published by the National Low-Income Housing Coalition last year, there is not
a single state in the U.S. where a minimum wage employee working full-time can reasonably afford a one-
bedroom apartment at fair market rent. This presents an incredible challenge because though the demand for
affordable housing rises, so too does the cost of living. Here in D.C., rents have risen by almost 30 percent over the
past 10 years. According to a report released by NYUs Furman Center for Real Estate and Urban Policy, of the
largest 11 U.S. metropolitan areas, the District of Columbia was the least affordable to the typical renter
household in 2014.

WHAT IS IMPACT INVESTING:

The Global Impact Investing Network defines impact investing as, investments made into companies,
organizations, and funds with the intention to generate social and environmental impact alongside a financial
return. Essentially, the objective is to encourage socially responsible investing by mobilizing capital into mission-
oriented entities that strives to make a positive impact in key areas presenting social, environmental or
infrastructural challenges.

WHY IS THE BILL NECESSARY:

According to the D.C. Fiscal Policy Institute, meeting the actual affordable housing demand in Washington, D.C.
would require an investment of around $5 billion; however, the citys total local funds budget is only $7 billion,
which is hardly sufficient to cover the citys housing needs in addition to other needs and priorities.

Through this legislation, we will accomplish the public policy goal of expanding affordable housing across the city
by leveraging the private market to seed investments in affordable housing production and preservation. To
finance affordable housing, both debt and equity are needed. Debt comes from a lender, such as a CDFI, and
equity typically comes from the government in two forms, either through a tax credit program, such as LIHTC or
through a subsidy like HOME, CDBG and HPTF. With this legislation, we will increase the amount of debt capital
available to CDFIs for the preservation and creation of affordable housing. When more debt capital is available,
more deals can be completed and subsidies can go farther. The benefit of the tax credit program is that it grows
the amount of debt capital available by attracting new investors that otherwise would not be investing in
affordable housing. The $1 million credit cap will yield $3 million in private debt capital, and interest-earned from
the investment is paid by the CDFI. This tax credit would further incentivize impact investments, and in so doing,
expand the amount of debt capital available for affordable housing.
 THE ROLE OF CDFIs:
INVESTORS BORROWERS
Individuals Affordable Housing
Community Loans
Corporations Funds Developers
Development
Financial (For-profit and non-
Foundations
Institutions profit developers)
Principal/Interest Repayment
(CDFIs)

IMPACT INVESTING IN PRACTICE:

Local impact investing campaign called Our Region, Your Investment being led by a CDFI, Enterprise Community
Partners. Since 2016, they have been able to raise $11 million in impact capital to finance the preservation or production
of local affordable homes. Their ability to raise this amount of capital in less than a year demonstrates investor demand
to support affordable homes. However, the lack of a tax benefit or incentive for the investment has been a barrier for
many people interested in making an investment.